Unless you’ve been living in a remote island for the last few years, you’ve heard about Crowdfunding or stories of people raising thousands or millions of dollars online.

The Crowdfunding Industry Report by Massolution put out data showing the overall crowdfunding industry has raised $2.7 billion in 2012, across more than 1 million individual campaigns globally. In 2013 the industry is projected to grow to $5.1 billion.

Some of the most interesting developments in crowdfunding, which are expected to grow in the months and years ahead, include:

The research focused mainly on crowdsourcing as a way to deliver 5 different types of project:

Ideation – the creative process of generating, developing, and communicating new ideas

Expertise-based – tasks are completed by online workers that are widely recognized as a
reliable source of techniques or skills

New technologies and an appetite for innovation have enabled entrepreneurs across the world to launch their projects and businesses. While much of the action takes place in developed nations, entrepreneurs in developing countries are beginning to catch up.

One country where this trend is highly visible is Mexico. Despite the entrepreneurs’ desire for success, it can be difficult for them to find startup or growth capital to fuel their ideas. Crowdfunding has shown itself to be a powerful and innovative tool to connect investors and backers with the startups and projects they believe in.

In order to better understand how Mexico can make use of the innovative funding method to spur innovation and entrepreneurship, the Multilateral Investment Fund (MIF) commissioned our sister company, the crowdsourcing and crowdfunding research and advisory firm Massolution, to create a unique report that explores the challenges and opportunities for crowdfunding in the country.

On 26th and 27th March, 2014, Massolution’s CEO Carl Esposti is supporting workshops and presenting the research findings and recommendations in Mexico City attended by the local platforms, members of IDB and MIF, as well as government participants from INADEM (Institute of Entrepreneurship), part of Mexico’s Ministry of the Economy.

In other words, the report takes a nuanced view of Mexico’s rich cultural history, current financial trends, and its socioeconomic demographics (among other factors) to propose a roadmap that the Mexican government can rely on to create regulation for developing a healthy crowdfunding industry.

“Crowdfunding has the capacity to galvanize innovation, create jobs, diversity economic activity, and contribute to the reduction of income inequality by improving access to affordable capital and bridging the gap between funding demand and capital supply for entrepreneurs and micro, small, and medium enterprises in Mexico,” states the report.

Borrowing from formal banking institutions in Mexico requires high securities and involves high interest rates. As a result, it’s difficult for entrepreneurs, and small and medium enterprises to establish and grow businesses via the traditional financial system. There is a need to fill this gap with affordable capital to promote innovation, entrepreneurship, and ultimately, economic growth.

However, there are still many challenges to exploit the full potential of crowdfunding in Mexico. Business education is fundamental for both borrowers and crowdfunders to understand financial projections, market conditions, and the risks associated to each project. Also, higher technological literacy is needed, from the supply side to navigate the internet looking for projects to crowdfund; and from the demand side to upload the projects in need of funding. Regulation is also an important challenge since regulators are not yet aware of all the potential risks and opportunities of this practice. It is essential to avoid government bureaucracies and at the same time guarantee the protection from fraud, money-laundering, and extortions.

Crowfunding is naturally seen with some skepticism among the population. Working on the above-mentioned challenges would unveil the potential benefits of accessing to a new and affordable source of financing for small and medium enterprises; especially for innovators and entrepreneurs that are in the quest of an opportunity to put their ideas into practice.

Related:

Those who are thinking of launching a crowdfunding platform, work in impact investing, or are a part of the public sector and that are considering how crowdfunding could be developed within their region will find the free report highly relevant. Those interested in discussing the merits of developing a study tailored to their own country can reach out to Massolution CEO Carl Esposti at carl@crowdsouricng.org.

Crowdfunding Sites To Choose From

Business owners are using different crowdfunding sites than musicians. Musicians are using different sites from causes and charities. Below is a list of crowdfunding sites that have different models and focuses. This list can help you find the right place for your crowdfunding goals and needs.

1. Kickstarter Kickstarter is a site where creative projects raise donation-based funding. These projects can range from new creative products, like an art installation, to a cool watch, to pre-selling a music album. It’s not for businesses, causes, charities, or personal financing needs. Kickstarter is one of the earlier platforms, and has experienced strong growth and many break-out large campaigns in the last few years.

2. Indiegogo
While Kickstarter maintains a tighter focus and curates the creative projects approved on its site, Indiegogo approves donation-based fundraising campaigns for most anything — music, hobbyists, personal finance needs, charities and whatever else you could think of (except investment). They have had international growth because of their flexibility, broad approach and their early start in the industry.
3. Crowdfunder Crowdfunder.com is the platform for raising investment (not rewards), and has a one of the largest and fastest growing network of investors. It was recently featured on Fox News as the new breed of crowdfunding due to the story about a $2 Billion exit of a crowdfunded company. After getting rewards-based funding on Kickstarter or Indiegogo, companies are often giving the crowd the opportunity to invest at Crowdfunder to raise more formal Seed & Series A rounds.

Crowdfunder offers equity crowdfunding currently only from individuals + angels + VCs, and was a leading participant in the JOBS Act legislation.

What’s unique about RocketHub is their FuelPad and LaunchPad programs that help campaign owners and potential promotion and marketing partners connect and collaborate for the success of a campaign.

5. Crowdrise Crowdrise is a place for donation-based funding for Causes and Charity. They’ve attracted a community of do-gooders and and fund all kinds of inspiring causes and needs.

A unique Points System on Crowdrise helps track and reveal how much charitable impact members and organizations are making.

6. Somolend Somolend is a site for lending for small businesses in the US, providing debt-based investment funding to qualified businesses with existing operations and revenue. Somolend has partnered with banks to provide loans, as well as helping small business owners bring their friends and family into the effort.

With their Midwest roots, a strong founder who was a leading participant in the JOBS Act legislation, and their focus and lead in the local small business market, Somolend has begun expanding into multiple cities and markets in the US.

7. appbackr
If you want to build the next new mobile app and are seeking donation-based funding to get things off the ground or growing, then check out appbackr and their niche community for mobile app development.

8. AngelList
If you’re a tech startup with a shiny lead investor already signed on, or looking for for Silicon Valley momentum, then there are angels and institutions finding investments through AngelList. For a long while AngelList didn’t say that they did crowdfunding, which makes sense as they have catered to the investment establishment of VCs in tech startups, but now they’re getting into the game. The accredited investors and institutions on AngelList have been funding a growing number of top tech startup deals.

9. Invested.in
You might want to create your own crowdfunding community to support donation-based fundraising for a specific group or niche in the market. Invested.in is a Venice, CA based company that is a top name “white label” software provider, giving you the tools to get started and grow your own.

10. Quirky
If you’re an inventor, maker, or tinkerer of some kind then Quirky is a place to collaborate and crowdfund for donation-based funding with a community of other like-minded folks. Their site digs deeper into helping the process of bringing an invention or product to life, allowing community participation in the process.

These 10 crowdfunding sites cover most campaign types or funding goals you might have. Whether you’re looking to fundraise or not, go check out the sites here that grab your attention and get involved in this collaborative community.